Italian PM to EU: 'No room' for modifications on budget

"I will send the message that we have a well-articulated budget, a budget to reverse the trend in the Italian economy", Conte said, before meeting Merkel.

While the 2.4 percent deficit projected for 2019 is well below the EU's 3 percent limit, it is up sharply from a targeted 1.8 percent this year.

European Commission President Jean-Claude Juncker suggested on Tuesday that the EU was unlikely to give the thumbs up to Italy's draft budget, which foresees the country's deficit rising to 2.4% of GDP next year.

"We are keeping all our promises, we are very happy with this budget", Conte told reporters Monday evening.

European Union leaders are set to discuss the eurozone on Thursday, with harder line leaders - most notably from the Netherlands - expected to denounce Italy's decision to go on a public spending spree. In an interview with Italian journalists by the head of the European Commission added that if Italy does not comply, it may cause a violent reaction of its European partners.

The Commission will now assess the fiscal framework - a separate document from the budget law - over two weeks, and could dismiss it and ask Rome to draw up a new one.

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"If Brussels says I can not do it, I do not care, I will do it anyway", Salvini said last week, referring to the budget's implementation.

Italy's fiscal plans have pushed up the yield on Italian government bonds, raising borrowing costs for state coffers and creating fears of contagion for the broader euro zone, but Tria brushed off concerns. This in turn, could bring back to the fore the aggressively eurosceptic stance of the coalition, which was moderated when it took to power.

To help fund spending measures, the budget makes life harder for Italy's struggling banks, reducing the proportion of interest payments they can deduct from their taxable income.

In May, a leaked report, published in part by the Huffington Post, showed that both parties discussed a commitment to leave the euro prior to entering into government, before abandoning that pledge. Officials sought to play down the chances of a major clash, with Giovanni Tria, Italy's foreign minister saying that the "idea that this budget will blow up Europe is totally unfounded".

The threat of a clash between Rome and Brussels comes as the Italian political situation continues to spook markets.

Italy's far-right Interior Minister Matteo Salvini on Tuesday hit out at President Emmanuel Macron after French police were caught committing the "unprecedented offence" of dumping migrants in Italian woods.

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